Answer ... The Commission has very broad discretion with regard to commencing an investigation. All cases are subject to an initial assessment phase, during which the Commission will examine whether the case “merits further investigation” and provisionally define the scope of the investigation (see paragraph 12 of the Commission Notice on Best Practices for the Conduct of Proceedings Concerning Articles 101 and 102 TFEU).
Investigations may be based on:
- complaints by third parties (e.g., customers and competitors);
- information provided by national competition authorities and other competition authorities;
- whistleblowing by individuals (e.g., employees of an undertaking engaging in potential anti-competitive conduct);
- leniency applications by cartelists; or
- the Commission’s own market monitoring or investigations, or on its own initiative (when facts have been brought to its attention or further to information gathered).
The Commission will commence an investigation when it has grounds to suspect that there has been an infringement of Article 101 TFEU. The Commission will be required to clearly outline the subject matter and purpose of its investigation and any dawn raids it conducts (see question 4.3).
Answer ... Pursuant to Chapter V (Powers of Investigation) of Regulation 1/2003, the Commission has several key investigatory powers, as follows:
- to issue requests for information to undertakings and associations of undertakings, either by simple request (in which case undertakings cannot be fined if they fail to respond) or by decision (in which case undertakings are obliged to respond under threat of a fine up to 1% of turnover);
- to take statements - that is, to interview persons who consent to be interviewed for the purpose of collecting information relating to an investigation; and
- to conduct inspections of undertakings and associations of undertakings, including by entering their premises, examining all relevant information found at the companies’ premises, copying relevant information and sealing premises, books or other sources of information to the extent necessary. Other premises – for example, the homes of directors – may also be inspected if there is a reasonable suspicion that relevant information relating to the inspection and to the business is kept at those premises, provided that a decision ordering such inspection is authorised by the national judiciary authority of the member state in question. The Commission may also inspect private devices used for professional reasons when found on the premises (see the Commission’s Explanatory Note on the Conduct of Dawn Raids).
Answer ... Cooperation between the Commission and international counterpart authorities during investigations is commonplace.
Cooperation takes place, for example, within the ECN framework (see question 1.3), which provides for cooperation between the Commission and NCAs. In particular, Regulation 1/2003 sets out a number of mechanisms that facilitate such cooperation.
For example, the Commission and NCAs actively cooperate during inspections: prior to adopting a decision ordering an inspection, the Commission must consult the NCA of the member state in whose territory the inspection will be conducted, and officials of the NCA of the relevant member state are to actively assist Commission officials in their inspection. At the request of the Commission, NCAs should also undertake inspections that the Commission considers necessary.
Of particular importance are the exchange of information provisions in Article 12 of Regulation 1/2003. The Commission and the NCAs, for the purposes of enforcing Articles 101 and 102 TFEU, are empowered to exchange and use in evidence “any matter of fact or of law, including confidential information”.
Cooperation also takes place with authorities outside the EU. For example, the Commission has bilateral agreements and memoranda of understanding with a number of countries – such as the United States, Canada, Japan, Korea, Switzerland, China and Brazil – which provide for cooperation on competition issues. Some of these (e.g., the bilateral agreement with Switzerland) make specific provision for the exchange of information with respect to investigations; while others (e.g., the memorandum of understanding with Brazil) provide more generally for overarching principles of cooperation and assistance.
Answer ... Third parties may be able to participate in the investigation to the extent that they provide information to the Commission regarding alleged anti-competitive behaviour, either on their own initiative or in response to a third-party request for information made by the Commission pursuant to Article 18 of Regulation 1/2003.
Third parties may also apply to be heard following the adoption of a statement of objections by the Commission against the undertakings, provided that they show sufficient interest in the outcome of the procedure. A sufficient interest may exist where it was the third party’s complaint that initiated the Commission’s investigation or where the third party has an economic or legal interest that may be significantly affected by the cartel behaviour. The hearing officer will make the determination on whether third parties are permitted to be heard. If they are permitted, they may request access to the Commission’s file and that they be given an opportunity to attend the oral hearing between the alleged cartelists and the Commission.
Answer ... See question 3.2 on the Commission’s investigatory rights and powers. The Commission is also obliged to comply with the rights of defence of the alleged cartelist outlined in question 3.5.
Answer ... An undertaking’s rights of defence must be respected – these include the right against self-incrimination, the right to a fair trial (including the presumption of innocence) and the right to legal professional privilege (see question 3.6).
The right against self-incrimination provides that the Commission may not compel an undertaking to provide answers that may involve an admission on its part of the existence of an infringement which it is incumbent on the Commission to prove. Regulation 1/2003 also refers to this right, but notes that undertakings are required to answer factual questions and provide documents, even if the information provided may be used against them.
Undertakings are obliged to cooperate actively with the Commission in the course of its investigations. Subject to the right against self-incrimination, the EU courts have held that this right requires undertakings to make available to the Commission all information relating to the subject matter of the investigation.
Obstruction of a Commission investigation should also be avoided. Pursuant to Regulation 1/2003, the Commission may impose fines of up to 1% of an undertaking’s annual turnover if it fails to fully or properly respond to a request for information or to submit to an inspection. In 2008, the Commission fined E.ON €38 million for breaking a seal during an inspection.
Obstruction also constitutes an aggravating circumstance under the Commission’s Guidelines on the Method of Setting Fines. In 2007, the Commission increased Sony’s fine in a cartel case by 30% for obstruction to nearly €47.2 million.
Answer ... Regulation 1/2003 does not provide for legal professional privilege; the concept has instead been recognised and elaborated by the EU courts. The AM&S case elucidated this principle of observation of confidentiality of communications between lawyer (admitted in a Member State) and client, subject to the conditions that the communications are:
- made for the purposes, and in the interests of, the client’s rights of defence; and
- between external (i.e., not in-house) lawyers and the client.
The Azko Nobel case in 2010 confirmed the second condition, although it has been clarified that internal working documents created for the purposes of instructing external lawyers may also be covered.
Answer ... Under Article 2(2) of Commission Regulation (EC) No 773/2004 of 7 April 2004 relating to the conduct of proceedings by the Commission pursuant to Articles 81 and 82 of the EC Treaty (now Articles 101 and 102 TFEU respectively), the Commission may make public the initiation of proceedings under Regulation 1/2003 in “any appropriate way”, provided that it first informs the undertakings involved.
Per the Commission Notice on Best Practices for the Conduct of Proceedings Concerning Articles 101 and 102 TFEU, the Commission’s current policy is to publish announcements relating to ongoing investigations on the Directorate-General of Competition’s website if this will not harm the investigation. These announcements are brief and do not cover confidential information – they typically confirm the opening of an investigation into unnamed companies in a particular sector and note the general period of time or date on which officials carried out inspections.